Abstract

I survey the recent literature on the formation of networks. I provide definitions of network games, a number of examples of models from the literature, and discuss some of what is known about the (in)compatibility of overall societal welfare with individual incentives to form and sever links.

This was written for the volume Group Formation in Economics: Networks, Clubs, and Coalitions, edited by Gabrielle Demange and Myrna Wooders, which is forthcoming from Cambridge University Press: Cambridge.
I thank Jernej Copic, Gabrielle Demange, Sanjeev Goyal, and Anne van den Nouweland for comments on earlier drafts. Financial support from the Lee Center for Advanced Networking is gratefully acknowledged.